Natural Grocers sees supplement sales rise in face of recent bad press
In the supplement category in particular, the company reported a 17% rise in sales. Even with the bad press supplements received after New York Attorney General Eric Schneiderman launched his assault on the industry, habitual consumers seem pretty much unaffected, said Kemper Isley, CEO of Natural Grocers.
“They came in about how they've been faring over the last couple years at our stores, a few basis points lower than what our overall growth has been . . . we haven't seen people not coming in to buy supplements,” said Isley in an earnings call with analysts that was transcripted on the site seekingalpha.com.
Natural Grocers has a model that splits the store about down the middle between supplements and organic foods. The company has been pursuing an aggressive growth strategy since going public several years ago. In the first half of its fiscal 2015 ending March 31, the company opened eight new stores and now has 95 stores in the western US. The company plans to open an additional 10 stores in the remainder of its fiscal 2015.
While Isley said the overall year was strongly positive, he did say that the company has been paradoxically affected by the falling price of oil through the six-month period. Oil hit a decades-low of $45 a barrel in early January. While this is usually thought of as a good thing for the overall economy, Natural Grocers operates in a number of states with a significant amount of petroleum production, and in those areas low prices means less work as drilling activity dries up and less money goes into the local communities.
“I think that the decrease in the price of oil has had quite an impact on a number of regions in the country and has had kind of a small detrimental effect on consumer confidence,” Isley said.
Earnings details
Among the highlights of Natural Grocers second quarter and first half earnings report were:
- Net sales increased 21.0% to $157.7 million in the second quarter and increased 21.0% to $303.6 million in the first half of fiscal 2015
- Daily average comparable store sales increased 5.6% in the second quarter and increased 5.9% in the first half of fiscal 2015
- Net income increased 35.1% to $5.4 million with diluted earnings per share of $0.24 in the second quarter and increased 29.6% to $9.0 million with diluted earnings per share of $0.40 in the first half of fiscal 2015
- EBITDA increased 29.4% to $14.5 million in the second quarter and increased 26.0% to $26.0 million in the first half of fiscal 2015
- Opened eight new stores in the first half of fiscal 2015, compared to nine new stores in the first half of fiscal 2014, resulting in growth rates of 17.3% and 24.6% for the twelve month periods ended March 31, 2015 and 2014, respectively.
